General Question

Why do gas stations charge an extra 9/10¢ per gallon of gas on top the > 4 dollars per gallon?

Back in the olden days when I was a kid and gas price was around 30¢ per gallon and a penny had significant value I could see a reason for the 9/10. Perhaps the 9/10¢ per pallon encouraged drivers to buy at lease 10 gallons of gas to save a penny?

But nowadays when the price of gas $4.00 9/10, and the value of a penny in so low, it is not even worth considering the 9/10.

Do you know why the oil companies continue with this insignificant and archaic pricing?

6 Answers

Mentally/psychologically the consumer recognizes numbers in ways that make them feel as if they are spending more or less. There are studies about that sort of stuff – it’s the same reason that people charge 19.99 for the crap you buy on infomercials. That one penny makes a difference to the mental perceptions of the consumer. 20 bucks sounds more expensive even though it’s just a penny. Same thing happens with whether or not there are numbers after the decimal or whether a dollar sign is or isn’t used in advertising. It’s all psychological trickery in attempt to get the consumer to buy.

I’ve always understood it to be as @Jenniehowell said, a psychological trick, one that is commonly used in retail in the U.S. That’s why things are priced like $1.99, $5.95, $2.98, and so forth. We tend to discount the 99 cents and focus on the dollar amount, which can influence spending.

I always thought the $x.99 started as a way to make the clerks use the cash register. Shop owners found if the clerks had to give back change from a sale they were less likely to put the money in their pockets.

Because it’s virtually invisible. People eventually stop seeing what’s always there. Plus, we’re mentally lazy; we screen out fractions—especially funky ones like this—because they’re too much mental work when we’re just trying to get an impression. If I ask you how much gas costs at your corner station, the odds are tremendous that you won’t figure in the 9/10. That’s because you’ve stopped seeing it.

It’s ingenious, really. The gas companies got an extra penny per gallon without paying a corresponding market penalty, and we can’t claim they didn’t tell us. The total additional revenues from that 9/10 are on the order of $1.7 billion/year.